ABOUT SEAN STANNARD-STOCKTON

Sean Stannard-Stockton is the president and chief investment officer of Ensemble Capital Management, located in Burlingame, CA, midway between San Francisco and Silicon Valley. From 2006 through 2012, Sean authored the Tactical Philanthropy blog and wrote regular philanthropy columns for both the Financial Times and the Chronicle of Philanthropy. In 2012, Sean officially ended the blog to focus on growing Ensemble Capital.

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Scaling Social Impact

Session Description: Scaling Social ImpactIn business, scaling requires companies to increase their organizational capacity and output in order to generate greater profits. Nonprofit organizations can scale social impact by not only increasing their own capacity, but also by encouraging other nonprofits to adopt their models. How should social enterprises weigh the tradeoffs between scaling their organization or scaling impact through sharing their process with others? Come hear the stories of three organizations that have successfully scaled using entirely different approaches.

The idea for this session came out of a plenary session I attended at the Center for Effective Philanthropy conference in 2009. At the plenary, representatives of Nurse-Family Partnership and Homeboy Industries discussed their dramatically different approaches to scaling their impact.

Nurse-Family Partnership is the classic case study of a nonprofit going to scale (seriously, you can read the Bridgespan case study of NFP here). Beginning in 1996, NFP took their evidence based program and began to replicate it around the country. They now offer services in 28 states and have over 16,000 families enrolled in their program.

Homeboy Industries was the largest gang intervention program in the country offering many services around their core mission to place at-risk and formerly gang-involved youth in productive jobs. But while they were the largest program in the country, they offered services exclusively in Los Angeles. During the session, founder and executive director Father Greg Boyle explained that they had intentionally resisted the many offers to replicate their program in other cities. However they did act as a model for other programs and help other programs get started. Since “scale” is the constant buzzword of social entrepreneurship in particular and philanthropy in general, it is interesting to hear the counter argument.

One of the reasons scale is pursued in the for-profit space is that many fixed costs diminish as an organization grows. Therefore, the bigger an organization gets, the more profitable it can be. But one of the implications of the fact that philanthropic knowledge is valued differently than for-profit knowledge, is that Father Boyle is “winning” when he helps other groups copy his program. The social impact that Homeboy Industries achieves accrues to the public in the same way that the impact that other programs create does. This means that unlike in the for-profit space, where Father Boyle would have to own the other programs to benefit from their success, in the social sector we all win when anyone wins.

In an interesting wrinkle to this story, Homeboy Industries was a victim of the recession and closed a large portion of their operations earlier this year. But unlike an organization which focused exclusively on scaling their organization, Homeboy Industries’ impact will carry on in the form of the many other gang prevention organizations with whom Father Boyle went out of his way to share his knowledge.

Joining Steve will be Shawn Bohen from Year Up, a nonprofit which is successfully pursuing a replication approach to scaling their impact. Jennifer Davis from National Center on Time & Learning, which has aggressively shared their knowledge and models with the field in an attempt to grow their impact. And Lance Fors from New Teacher Center, which, as a program at the University of California, Santa Cruz used a knowledge sharing approach and now has launched an aggressive growth capital campaign having spun out of UC Santa Cruz and set about scaling their organization.

One of the most common mistakes “business-minded” people make when they examine the social sector is to miss the fundamental ways in which it is different from the for-profit sector. When Starbucks was first trying to go to scale, their only option was to use a replication approach in which they owned the product they were selling. It would have made zero sense for them to go around the country preaching the joy of great coffee to other companies and teaching them the business. But if Starbucks had been a nonprofit, who wanted to share the joy of great coffee to enhance the public good, then such a counter-intuitive approach would have made perfect sense.

There is no doubt that the Social Capital Markets conference attracts a lot of “business-minded” people. The intent of this session is to help drive home one of the most fundamental differences between for-profit and nonprofit activities as well as present three different approaches to increasing an organization’s impact.

Click here to register for the conference. Nonprofit employees are eligible for a 40% discount and all readers of Tactical Philanthropy are eligible for a 30% discount (email me for the code, it expires on 8/19).

2 Comments

What a great track. But a comment about Homeboy…and a cautionary lesson to scaling up, something your link does not quite capture…Boyle (the founder and ED) could have managed the recession and saved the organization but for a fiscal blunder. He said: [The $5 million for operations] “should have been included in our capital campaign, and it wasn’t,” Boyle said. “And that was our error…. We sort of forgot that we were going to put a program in this place.”

That’s true. The idea for this session came from the CEP plenary that occurred prior to Homeboy’s fiscal problems. I thought it important that I point out their issues now, but I think the core strategic approach to scaling impact at Homeboy vs NFP is real and important, regardless of Homeboy’s financial problems. Regardless, they chose the diffusion approach over replication long before they had financial issues.